No-Frills Carrier Completes Debt Restructure Four Months After Filing for Chapter 11

Famously low-cost, no-frills carrier Spirit Airlines has completed its debt restructuring and surged out of Chapter 11 bankruptcy. For now, it seems that Spirit will continue flying solo as it becomes a more stable competitor.

Spirit Airlines filed for bankruptcy nearly four months ago, on November 18, 2024, after years of teetering on the edge. It was hit hard by the COVID-19 pandemic’s travel blockage and failed to bounce back once expenses and competition surged, landing it more than $2.5 billion in losses before its Chapter 11 filing.

The carrier dove headfirst into a debt restructuring under its parent company, Spirit Aviation Holdings. The plan was given the judicial go-ahead in February, allowing it to convert $795 million from debt to equity. Spirit also took in a $350 million equity investment from its existing pool of investors.

“I'm incredibly proud of our Team Members for their continued dedication to our Guests and each other throughout this process,” expressed Spirit CEO Ted Christie. “Despite the challenges we've faced as an organization, we're emerging as a stronger and more focused airline.”

Spirit’s announcement also highlighted that it would be prioritizing self-growth post-bankruptcy, shutting down the idea of potential mergers. Several other airlines, including JetBlue and Frontier, attempted to cut a deal during Spirit’s bankruptcy and failed. Just last month, Spirit turned down a third Frontier offer.

Part of Spirit’s growth plan is to steer away from its no-frills reputation and tap into upscale travel by adding tiered ticket options with more included amenities. The carrier took a stand in this market a few months before the bankruptcy process ensued by adding a bundle for a larger seat, boarding priority, complimentary bags, internet connection, and snacks. This gives it the upper hand over rival Southwest Airlines, which recently confirmed that it would start charging for checked bags for the first time.

“I think it’s going to be painful for a little bit as they find their footing, and we’re going to take advantage of that,” Christie stated.

In the meantime, Spirit has plenty of workforce trust-building to do. It furloughed nearly 400 pilots while fighting bankruptcy, which will not be easily forgotten as it moves forward.

FMI: www.spirit.com